Dubai World Unit Said to Arrange Loans for Inchcape Acquisition

April 20 (Bloomberg) -- Dubai World’s investment unit
Istithmar World PJSC is arranging as much as $350 million of
loans to attract bidders to its Inchcape Shipping Services, two
people familiar with the matter said.

The so-called staple financing will be available for any
bidder for Inchcape Shipping and comprises senior leveraged
loans and junior debt due in about six and eight years, said the
people, who declined to be identified because the information is
private.

Bank of America Merrill Lynch and Royal Bank of Scotland
Group Plc are arranging the financing, the people said.

A spokesman for Dubai World, who declined to be identified
citing company policy, wouldn’t comment on the transaction. RBS
spokeswoman Claire Gorman and a London-based spokeswoman for
Bank of America also declined to comment.

Istithmar is selling Inchcape Shipping after the U.K.-based
transport company more than doubled earnings before interest,
taxes, depreciation and amortization to about $70 million last
year. Inchcape Shipping, which traces its origins to 1847 in
Calcutta, provides port, marine and cargo outsourcing services
in 50 countries.

Loans to the company would represent five times its Ebitda,
higher than the average ratio for leveraged buyout targets in
Europe of 4.7 times, according to Fitch Ratings. In an LBO,
private equity firms pay for an acquisition by loading a target
company with debt and using its cash flow to repay lenders.

Dubai World, which separately is seeking to restructure
$24.8 billion of debt, is one of the emirate’s three main state-owned holding companies.